CBIC Notifies New Rule 47A – Time Limit for Issuing Tax Invoice in RCM Cases

By: Admin
October 09, 2024
Categories: 54th GST Council
4 Min Read

Background:

Under GST law, when a registered person receives supplies from an unregistered supplier and is liable to pay tax under the Reverse Charge Mechanism (RCM), they must issue a self-invoice and payment voucher. Section 13(3) of the Central Goods and Services Tax Act, 2017 (CGST Act) specifies the time of supply for such services.

The 53rd GST Council Meeting (June 22, 2023) provided clarifications about the time limits for availing Input Tax Credit (ITC) under Section 16(4) when the recipient issues an invoice under RCM. The financial year for calculating the ITC time limit is determined by the year in which the recipient issues the invoice.

Amendments proposed under the Finance (No.2) Act, 2024, effective from November 01, 2024, excluded government departments registered solely for TDS deduction under Section 51 from being required to issue invoices under Section 31(3)(f). These clarifications were aimed at simplifying processes for such departments.

The CBIC issued Circular No. 211/5/2024-GST on June 26, 2024, clarifying that for supplies under RCM, the financial year for availing ITC will be the one in which the recipient issues the invoice. In cases of delayed issuance, interest and penalties under Section 122 of the CGST Act could apply.

Key Update:

The CBIC has introduced Rule 47A to the CGST Rules, via Notification No. 20/2024 – Central Tax dated October 08, 2024. This rule becomes effective from November 01, 2024, and reads as follows:

Rule 47A:
Time limit for issuing tax invoice in cases where the recipient is required to issue the invoice.
“Notwithstanding anything contained in Rule 47, where an invoice referred to in Rule 46 is required to be issued under clause (f) of sub-section (3) of section 31 by a registered person liable to pay tax under sub-section (3) or (4) of section 9, the said invoice must be issued within 30 days from the date of receipt of the supply of goods or services, or both.”

Our Comments:

This new Rule 47A establishes a 30-day time limit for issuing tax invoices in cases where recipients are liable to pay tax under RCM for supplies from unregistered suppliers.

The rule aims to improve tax administration by ensuring timely issuance of invoices, helping streamline compliance with Section 31(3)(f) of the CGST Act. Delays in issuing invoices may lead to interest and penalties, promoting accountability and efficiency in tax collection.

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